State to NYRA: Up the takeout

A state agency charged with overseeing the operations of the New York Racing Association has recommended that the association raise its takeout rates in order to address its cash-flow problems.

The recommendation to raise takeout was contained in a letter sent by the chairwoman of the oversight board, Carole Stone, dated Nov. 17, and sent to Charles Hayward, NYRA's chief executive officer. The letter was distributed by the board to reporters.

The letter also recommended that NYRA seek "deferment" of its dues to the National Thoroughbred Racing Association for one year; mortgage its television contracts and its share of the data-collection business Equibase, which is a joint venture of racetracks and The Jockey Club; and settle outstanding lawsuits. The letter did not specify the lawsuits.

In addition, the board said that NYRA should charge more for its simulcast signal and seek a cash advance from MGM Grand, NYRA's partner in a slot-machine project at Aqueduct. The casino is expected to open next fall.

Stone asked NYRA officials to respond with any concerns to the proposals by Nov. 28.

Bill Nader, the senior vice president of NYRA, said that NYRA officials would not comment about the letter's proposals. "We're going to respond by the date that Ms. Stone gave us," Nader said.

Nader did say, however, that NYRA was opposed to any increase in its takeout rates.

"Raising takeouts is not going to work to our benefit," Nader said. "It's going to result in lower handle, and any incremental gain we would get would be more than offset by the overall decline."

NYRA reduced many of its takeout rates in 2001. Several of NYRA's takeout rates are among the lowest in the nation, such as at 14 percent for win, place, and show wagers and 17.5 percent for two-horse bets.

NYRA's takeout rates have long been contentious in New York because of the state's offtrack betting system. New York's six locally owned offtrack betting corporations are required to offer NYRA's races, and because the companies keep the difference between the takeout and their legally required payments to government and the racing industry, many of the OTB companies have supported raising takeout rates.

In early October, Hayward told the oversight board that NYRA could run out of cash by the end of this year. Hayward made the comments while attempting to drum up support for the association's plans to sell 80 parcels of land near its Aqueduct racetrack and auction off 19 paintings that have been donated to the association.

The oversight board and the New York Racing and Wagering Board both have indicated that NYRA cannot proceed with either of those plans without their approvals.